I plan to retire in March 2005 at the age of 59.75. When and what percentage or dollar amount can I start withdrawing from my SIMPLE IRA account?

Congratulations on retiring at the young age of 59! You may withdraw assets from your SIMPLE IRA at any time, and there is no maximum or minimum restriction on the amount you can withdraw; rather, withdrawals are optional until you reach age 70 ½. Since you will be at least age 59 ½ when the distributions occur, you will not owe any early-distribution penalties (the 10% additional tax which applies to distributions made before an individual reaches the age of 59 ½). You will, however, owe income tax on the amount you withdraw from the SIMPLE during the year.

When you reach age 70 ½, you will have to begin required minimum distributions (RMDs). At this time, you may distribute the full balance of the IRA or distribute a minimum amount each year. Your IRA custodian will help you calculate the RMD amount. Before you decide to withdraw your SIMPLE balance, you should consult with your financial advisor, who should be able to help you use your SIMPLE IRA balance, along with your other assets, to plan for a financially secure retirement.